Dexcom Inc Q4 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Larry Biegelsen - Wells Fargo Securities LLC - Analyst : Good afternoon. Thanks for taking the question. Kevin, I wanted to start with the issues you identified on the Q2 call, the sales force issue and the DME issues. And Jeremy gave some color in his prepared remarks. But I'd love to hear a little bit more from you on the status of each. It sounds like your share in the DME channel has stabilized. So how are you thinking about those issues that negatively impacted '24 in '25?

Question: Jeffrey Johnson - Baird - Analyst : Jeremy, you talked on the call about narrowing that kind of volume versus revenue gap in the US that has been pretty wide here in the last couple of quarters. I mean, if I just put some numbers on it, it seems like in the fourth quarter, that gap was maybe 16 points, 17 points. Again, I don't have the perfect volume estimates in my number, but 16 or 17 points, that's down for maybe 20, 21 points, something like that in the third quarter. Where do you think that goes? You said it falls off into 1Q. Does it fall to low double digits, just that kind of volume versus revenue gap in the US? And then as it further converges throughout the year, can you get that back into the single digits into the mid-single digits, just conceptually help us understand how to think about that gap between those US volumes and the US revenue growth.

Question: Robert Marcus - JPMorgan Chase & Co - Analyst : Jeremy, maybe to follow up on that. There's a lot of considerations on both the top line and down the P&L between 15-day sensor lapping of some of the headwinds on pricing, how should we think about cadence through the year? Obviously, the math points to a much stronger second half on a growth rate basis. But how should we think about cadence through the year and particularly first quarter as we set up expectations here.

Question: Danielle Antalffy - UBS Group AG - Analyst : Congrats on the strong end to the year. Just wanted to follow up on the comment around some of the type 2 coverage. I think two of the three largest PBMs are now covering for not in from using type 2. And Jeremy, maybe this question is for you and how to think about -- I appreciate what you're saying for 2025 as far as revenue growth converging with volume growth, but as more of this non-insulin using type 2 patients come online, how should we think about that? So I guess this is more over the next few years. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 13, 2025 / 9:30PM, DXCM.OQ - Q4 2024 Dexcom Inc Earnings Call And will that diverge again before it re-converges or how do we think about that given that this is a less intensive patient population? I'm just trying to get a sense of what you guys are seeing from a pricing perspective from those.

Question: Travis Steed - Bank of America - Analyst : Just wanted to ask on the G715-Day. I know you don't usually comment but wanted to feel the process the update is going. I guess the question is really like has given you the confidence to still say a second half launch here? And once you get that approval, how should we think about that process rolling out a couple of quarters before the patient base is kind of fully converted. Joshua Jennings Yes.

Question: Joanne Wuensch - Citibank - Analyst : Briefly, what does it take to get the 15-day integrated with the pumps? Is that a difficult process. And I'm going to also ask, I think they've heard or saw on a slide, G8. Is there anything you can tell us about that?

Question: Matthew Taylor - Jefferies Group LLC - Analyst : I did want to ask one about the expanding coverage in terms of the PBMs now covering these lives and also thinking through to, hopefully, next year or the year after getting the non-intensive type 2 coverage. So I just wanted to understand how you think about the additional lives being covered as a driver this year. Do you expect that group to show in the numbers? Is that contemplated in your guidance? And if you play through the study, when do you think you'll actually get more of an uptake in that noninsulin type 2 population?

Question: Matthew O'Brien - Piper Sandler & Co - Analyst : I'm not sure if this is for Kevin or Jeremy or Jay, for that matter. But are you expecting a record new patient number here in '25? And if so, can you just talk a little bit about the composition of where that's coming from, just given that we're getting a little bit more saturated on the intensive side and a lot more of this needs to come from basal and then not intensively managed type 2. So just maybe talk about the proposition that gets you to that level, if you are committing to that? And just making investors or helping investors feel comfortable you can do that given this patient population that historically you haven't been as strong with. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 13, 2025 / 9:30PM, DXCM.OQ - Q4 2024 Dexcom Inc Earnings Call

Question: Jayson Bedford - Raymond James Financial Inc - Analyst : I apologize if this is redundant. But it sounds like there's no change to the Stelo expectation of 2% to 3% of sales. If you confirm that great. But can you just also talk about the Stelo trend through the year, meaning specifically the timing of drivers, it sounds like Amazon is coming on soon. But when did the $5 million newly reimbursed come online? And when do you have full app integration with URA.

Question: Shagun Singh Chadha - RBC Capital Markets - Analyst : Kevin and Jeremy, I was hoping you could walk us through some of the assumptions behind the 14% growth rate for 2025. It looks like there are some areas of conservatism. I don't think you see DME share gains, you're assuming it to be flat. Why is that? You do have easy comps? You guys typically guide mid- to high teens, but you tend to exceed those. You do have a fully productive sales force, more reps year-over-year 2 new product launches and then you are looking for a record new patient starts. So can you walk me through that through the assumptions, should we assume the 14% growth as a base case? And then just on the 15-day sensor, what is assumed in that guidance for the second half?

Question: Christopher Pasquale - Nephron Research LLC - Analyst : I wanted to follow up on Stelo. You're coming off your first holiday season first New Year's resolution season with a consumer product. Did you see an acceleration in subscription activity tied to those seasonal factors? And now with a few months under your belt of the launch, how are you feeling about your ability to keep users engaged after they've gone through their first couple of sensors. And you mentioned AI, I would just love to hear a little bit more about what role that plays in that engagement. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 13, 2025 / 9:30PM, DXCM.OQ - Q4 2024 Dexcom Inc Earnings Call

Question: Steven Lichtman - Oppenheimer & Co - Analyst : Yes, just building on Stelo, at ADA last year, you talked purposely about focusing Stelo messaging on the non-insulin type 2 first. with the coverage making real progress here, how are you thinking about that messaging changing over the next couple of years and there be more of a bifurcation between G-Series for type 2 and Stelo for maybe prediabetes and beyond?

Question: Issie Kirby - Redburn Atlantic - Analyst : I wanted to ask about the G8 sensor and how we should be thinking around potential accuracy improvements really going after made on the glucose monitoring side of this device. And then you've touched upon multi-analyte, what discussions are you having with pairs about the ability to perhaps look at a premium price for a sense of these capabilities?

Question: Michael Polark - Wolfe Research LLC - Analyst : I want to ask about the point estimate for the revenue guidance. Jeremy, you have a history of providing a range of about 5 points in recent years. So why just one number and not a range. If you had to think about a range around this 4.6% is 4.6% the floor, a midpoint? How would you frame that? I'd appreciate any color. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 13, 2025 / 9:30PM, DXCM.OQ - Q4 2024 Dexcom Inc Earnings Call

Question: William Plovanic - Canaccord Genuity Australia - Analyst : I'm going to go to a different angle here. We've been talking about revenue a lot. I really want to talk about profitability if we can. Obviously, '24 was a tough year. we've really kind of tapped out of that 20%-ish operating level. You're looking for a little increase in '25, how do we think about kind of the years after? Is this going to be something where it's a 1% expansion per year in operating adjusted operating? Or are there any lever points that could really accelerate this?

Question: Patrick Wood - Morgan Stanley & Co LLC - Analyst : [ 15 ] day again, so apologies about that, but it's obviously a big impact. I guess -- how are you thinking long term about what the average wear time will do? Because presumably, there'll be a subset of patients who may want to change their sensor a little bit more frequently for all kinds of different reasons, whether it's how they're actually adhesive, or (inaudible) or things like that. Do you have any inflow from like early days of Stelo to get a sense for change out rates? Or I'm just trying to think where does it ultimately end up? It's obviously not completely 15 days, but I'm just trying to get a sense of where you think the average consumer is going to end up.

Question: Michael Kratky - Leerink Partners - Analyst : You walked through some of the growth trends across the different segments of the diabetes population earlier on the call. Maybe as a follow-up to that, have you seen any noteworthy shifts in your market share that you're capturing across the different segments? And anything in particular you'd expect to see in 2025?

Question: Matthew Miksic - Barclays Investment Bank - Analyst : So just one quick clarification and then a question on some of the comments you made about economics of patients. So the quick clarification was just -- I'm not sure if you've given a time frame for yet, approximately? Is it one year away, two years away, that would be helpful. And then the question on the economics was I think the perception is among investors that as you move and call it, to the right, lower acuity patients noninsulin and so on that the economics and the economic value of that per patient is lower. And it sounds like on a per unit basis, I think as you were describing earlier, not true. So is that purely driven by use case utilization, renewed prescriptions and so on? Or is there different rebates? Maybe how would you sort of like dispute that kind of perception out there about that segment of the market.